• Project has a number of hurdles, including pending federal and state authorizations and wildlife concerns, but the process was set in motion last winter.

By Mike Koshmrl, WyoFile.com

A gas exploration company with Florida ties is pursuing plans to pull groundwater out of existing coalbed methane wells in southern Wyoming, then pipe it into the lower reaches of the water-stressed Colorado River Basin. 

The project was formally initiated in December, when the State Engineer’s Office received 21 groundwater test well applications from Mark Dolar of Dolar Energy, LLC. The test well s are all located on Bureau of Land Management property south of Rawlins in the Atlantic Rim gas field.

Two test well applications have since been rescinded by Dolar to comply with the state of Wyoming’s sage grouse and big game migration policies, according to an email from State Engineer Brandon Gebhart. 

A project review letter from the Wyoming Game and Fish Department summarizes what the project proponent seeks to do with the water. 

“If the water is of sufficient quality, the applicant hopes to transport groundwater to Colorado via a pipeline,” states a letter signed by Habitat Protection Supervisor Will Schultz.

But Sen. Larry Hicks (R-Baggs), who’s on staff with the Little Snake River Conservation District, has met with Dolar and believes that’s one of several uses of the water being considered if the plans move forward. Exchanges within Wyoming, he said, could also be an outcome.

“The simple fact is the market’s much more lucrative now than it was 20 years ago,” Hicks told WyoFile. “He doesn’t have to send it to Colorado.”

Hicks used that rough historic benchmark because there have been repeated efforts since Atlantic Rim field drilling started in the mid-2000s to make use of the water surfaced during gas production. Currently, he said, the produced water is injected back into the ground — which takes energy and money — and it doesn’t make sense given the currently dismal economics of natural gas. 

“The water is probably, at this point in time, as valuable or more valuable than the natural gas,” Hicks said. “It’s just a matter of figuring out how you utilize that water, and whether there’s a sufficient enough quantity to justify a lot of expenditures.”

Energy companies in the past ultimately determined that using Atlantic Rim formation water didn’t pencil out, even though it’s considered pretty high quality. And they’ve tried, even building out infrastructure. 

A historic endeavor 

Steve Degenfelder, then a land manager for Atlantic Rim driller Double Eagle Petroleum, recalled that his former employer secured permits to surface discharge a limited volume of untreated water via a pipeline and separately desalinate other volumes. Neither worked out long-term. 

“We did discharge some into Muddy Creek, but very little,” Degenfelder said. “We just got a lot of resistance from the environmental community and BLM.” 

Groundwater in the Atlantic Rim area is both abundant and filled by snowmelt coming off the west slope of the Sierra Madre Range, Degenfelder said. During the heyday of the Atlantic Rim field’s development, the two largest drilling companies were producing roughly 100,000 barrels of byproduct water daily — the equivalent of a small stream that flows continuously carrying nearly 7 cubic feet per second. Oftentimes water encountered during the drilling process has a lot of organic matter like oil, but in this region, it’s pretty pristine, he said.

“There’s a great deal of water to be had and it’s class three water [in Wyoming regulation],” Degenfelder said, “so it’s very good for livestock and wildlife to consume.” 

But it’s also too salty for the most likely use: irrigation. The Wyoming Department of Environmental Quality has standards, and the Atlantic Rim water generally doesn’t cut it. 

“The sodium is too high,” Hicks said. “[DEQ] was concerned that when you irrigate with high-sodium water, you poison the soil. It turns white.”

Already, there are issues with too much salt in Atlantic Rim waterways, and disturbing the soil in the region through industrial activity might have increased salinity levels at times. Salt concentrations in the main drainage in the area — Muddy Creek — increased by between 33% and 71% in the years 2009-2012 compared to 2005-2008, according to a 2015 U.S. Geological Survey study. But the sharp uptick in salinity also doesn’t perfectly align with the height of the drilling boom, the Earth Island Journal reported at the time.

It’s unclear how Dolar Energy would deal with water that’s too salty for irrigation.

Hicks’ understanding is that Dolar Energy seeks to “cherry pick” the highest-quality water from the test wells and potentially market that only. 



What’s the plan this time?

Mark Dolar did not respond to multiple WyoFile requests for an interview. His company’s website includes little information, though it does feature a short podcast that describes his interest in natural gas resources in the Atlantic Rim field. A map included on the website shows that he’s also done business in the Pinedale area, three parts of Utah plus Colorado’s Piceance Basin. 

Dolar Energy at one time was a registered business with the Wyoming Secretary of State Office, though it’s been listed as inactive since 2018. The LLC for the oil and gas exploration company is currently registered and considered active with the Florida Department of State. 

Dolar’s bid to put Wyoming water in a pipeline and send it to Colorado has been attempted before on a much larger scale. 

More than a decade ago Fort Collins, Colorado resident Aaron Million pushed a failed proposal to tap Flaming Gorge Reservoir and pipe the water across southern Wyoming and the Continental Divide to the Colorado Front Range. Although it’s been shot down repeatedly, a fourth iteration of the project was still on the table as of 2022, and the dream of the largest privately funded water project in the history of the West is still not dead, according to a recent feature story in the progressive magazine Mother Jones.

Degenfelder has met Dolar before but was unaware of his recent proposal. “I wonder what those guys can sell Wyoming water to Colorado for?” he asked. 

The Atlantic Rim and Muddy Creek drain into the Little Snake River Basin, a tributary of the Green River that’s part of the overallocated Colorado River Basin. Amid long-term drought, it’s an era of depleted reservoirs and cuts to water allocations in the region — which may be mandatory in Wyoming’s portion of the basin by 2025. 

Given the shortages, Hicks’ sense is that the value of water in the Colorado River Basin has increased “astronomically” and that there’d be a market for the Atlantic Rim water. Still, he said, there are many factors that could prevent the plan from coming to fruition, one of them being the economics of tapping less than two dozen abandoned wells.

“Is there enough water there of sufficient quality that it doesn’t have to be treated?” Hicks asked. 

Hurdles and hurdles

Hicks sees another hurdle: It’s unclear whether water taken out of Atlantic Rim-area aquifers and surface discharged is subject to interstate water agreements. 

“If he produces all of that [water] and they say, ‘That’s connected to the surface water,’ Wyoming’s only entitled to 14% of that under the Upper Colorado River Compact,” the state senator said. 

Groundwater is subject to the Colorado River Compact “to the extent it is Colorado River System water as that term is used in the compact,” Gebhart, the state engineer, explained in an email. 

“However, the seven states which are subject to the compact have never mutually determined to what extent groundwater constitutes Colorado River System water,” Gebhart wrote. “The ability to use groundwater within Wyoming is only subject to our individual state laws.” 

Constitutionally, the groundwater is owned by the state of Wyoming. If Dolar Energy proceeds with its plans, the company intends to file applications for the “points of use” of the Atlantic Rim groundwater, Gebhart said. 

Permitting for activities and disturbances to federal land is another potential obstacle. 

The State Engineer’s Office sent Dolar Energy’s 21 groundwater test well applications to the Bureau of Land Management on Feb. 15, according to the state engineer. At that time, the state office shared concerns about who would be responsible for the currently plugged and abandoned coalbed methane wells if they weren’t going to be used after being reentered. 

The BLM’s Wyoming office hasn’t taken any action because Dolar Energy hasn’t submitted anything, said Brad Purdy, deputy state director for communications. All of the leases for the old wells have been terminated, he said. 

“If the company is interested in doing commercial H2O wells off of those CBM wells, we have to get some applications,” Purdy said. “We don’t have any right-of-way applications, we have no [applications to drill] to reenter a plugged well. The proponent has a lot of stuff they need to submit before we can run NEPA and even begin to analyze this.” 

Wildlife managers’ concerns are another potential impediment to Dolar Energy’s plans. 

The Wyoming Game and Fish Department’s review letter shows that 19 of the 21 applied-for test wells (two were later rescinded) are located within the designated Baggs Mule Deer Migration Corridor. Of those, six wells are located on ground that’s both “stopover” and “high use” habitat. One well each fell solely within high use and stopover areas, while the remainder would be located within “low” or “medium” use areas. 

“The proposed well sites were recently plugged and the pads reclaimed,” Game and Fish’s letter states. “We are concerned that disturbance at these well sites, specifically within the high use area and stopovers within high use areas, will impede or reverse the reclamation process while also negatively impacting migrating mule deer.” 

“Lastly, it should also be noted that a water pipeline in the Baggs area will likely traverse sensitive and vital wildlife habitats, much like these exploratory wells,” the letter noted.

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